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Please note by using any of the links provided for your convenience you will be leaving Fidelis Wealth Advisors website. The hyperlinks are to websites and servers maintained by third parties. We do not control, evaluate, endorse or guarantee content found in those sites. Your use of such sites is at your own risk.
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“Only when the tide goes out do you discover who’s been swimming naked.” Warren Buffett

Posted on

By: Sam Tenney, CFP, AIF

We are actively monitoring the news regarding Silicon Valley Bank (SVB) and other current economic events.  

Why does this matter to you?

Rising interest rates and new banking regulations impact all investments. Could recent events with SVB, Signature Bank and others cause the Federal Reserve to pause raising interest rates? These are topics that will influence our investment positioning as we gather more clear information.  

The closure of SVB is a big financial domino that has fallen, partially, as a result of the recent rapid increase in the Federal Reserve’s interest rate policy. SVB will not be the last domino to fall. This letter provides some insight into the recent events we are monitoring.

What happened?

Silicon Valley Bank (SVB) was the 16th largest bank in the US. SVB was the financing and banking partner of approximately half of all tech startup companies in Silicon Valley. SVB underwent a run on the bank (which means withdrawal requests exceeded cash on hand), late last week. The bank was shut down by the FDIC on Friday.  

SVB was more unique than most banks, in that 97% of deposits held with the bank were over the $250,000 amount that the Federal Deposit Insurance Corporation (FDIC) insures. Thus, most deposits were uninsured and at risk of at least a partial loss. On Sunday, the FDIC in connection with the US Treasury department and Federal Reserve created a backstop for all deposits at this bank and others that have been shut down.  

Why did it happen?

SVB tripled in size from 2019 to 2022 increasing from approximately $60 billion in assets to around $200 billion. As a result, the bank invested large amounts of cash in government bonds and mortgage-backed bonds at historical low interest rates. Then, the Fed Reserve raised rates at a historically fast pace last year, which led to the banks bond investments falling in value. In addition, SVB’s business niche of venture capital was slowing rapidly in 2022 into 2023. The bank sought to firm up their financial balance sheet, so they sold some investments, and then tried to raise more capital from investors. The timing of both, and the previously disclosed losses on their investment portfolio spooked investors and depositors, which sparked a rapid run on the bank. The FDIC took over the bank on Friday. Just three days earlier, Moody’s rating agency had listed SVB with an A credit rating.  

Bottom line, SVB grew too fast without proper planning or risk management by their executives. Poor timing exposed SVB lack of preparation, thus when the Federal Reserve’s policy turned to aggressively raising interest rates, combined with a business slowdown, SVB’s management mishandled these hurdles and accelerated their own financial crisis. As the tide of low interest rates went out, SVB got caught without their clothing, as Warren Buffett famously stated in a previous financial collapse.  

What did the government do?

Government (FDIC, Federal Reserve & US Treasury) decided on Sunday to back all depositors, not stock, or bond holders of SVB.  

Why did the government do what they did?

The government is trying to prevent a run on other banks and to prevent a full scale financial crisis. To do this, they provided an implied guarantee (backstop) to SVB depositors. What this means is that all deposits (even those held above the $250k FDIC limit) will be protected. The government also wanted the customers of the bank to have access to their deposits, to minimize the disruption SVB closure had on its many business customers. Businesses relying on SVB would have experienced severe operational disruptions, and potential insolvency (which would have led to a large increase in unemployment), to prevent this, the government stepped in.  

Doing so, it appears that the Federal Government has taken the risk out of having deposits over $250k at a bank (we are still trying to determine if this will become an explicit guarantee from the FDIC). It seems likely at this time that this change will apply to Signature Bank and any others going forward.  

What does this mean for you?

It means more investment volatility as uncertainty continues. It means that we all have to better understand what rules we are playing by as investors, savers, and depositors.  

I believe in human innovation, human ingenuity, and a growth mindset, as such, I believe we must continue investing for the long-term even with the all the noisiness of politics, greed, and headlines dominating the news each day.  

Please call us if you have any questions.

This blog is general communication being provided for informational purposes only.  This information is in no way a solicitation or offer to sell securities or investment advisory services.  It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy.  This does not contain sufficient information to support an investment decision.  Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest.   Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved.  No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Fidelis Wealth Advisors, LLC. Fidelis Wealth Advisors does not provide legal or tax advice.  Please be advised to consult with your investment advisor, attorney or tax professional before making any investment decisions.

Market Snapshot 09.13.2021

Posted on

Created by: Sam Tenney

  • House democrats have finalized language in their new bill that would look to raise taxes; this tax bill is meant to help fund the new 3.5 trillion-dollar spending bill that is still in the works. The new corporate tax rate would rise to 26.5%, up from 21%, and the new long term capital gains rate would be at 25% up from 20%. If passed this could lead to volatility in the markets.
  • Supplemental unemployment assistance provided for the Covid-19 pandemic has ended in all 50 states, as of the week of September 4th. However, preliminary JOLTS numbers show that hiring has not picked up as sharply as expected, likely due to increased savings through the pandemic.
  • Consumer Inflation expectations have hit a decade high, with consumers reporting a predicted 4% year over year expected inflation. This could have a large effect on consumer purchasing habits.

SOURCES

https://www.ft.com/content/ced45222-f266-4d48-b754-e960e8581c94

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/

https://www.wsj.com/articles/china-sets-new-rules-for-youth-no-more-videogames-during-the-school-week-11630325781?mod=rsswn

Please note by using any of the links provided for your convenience, you will be leaving Fidelis Wealth Advisors website. The hyperlinks are to websites and servers maintained by third parties. We do not control, evaluate, endorse, or guarantee content found in those sites. Your use of such sites is at your own risk.

This blog is general communication being provided for informational purposes only.  This information is in no way a solicitation or offer to sell securities or investment advisory services.  It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy.  This does not contain sufficient information to support an investment decision.  Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest.   Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved.  No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Fidelis Wealth Advisors, LLC. Fidelis Wealth Advisors does not provide legal or tax advice.  Please be advised to consult with your investment advisor, attorney or tax professional before making any investment decisions.

Are You Sitting On Too Much Cash?

Posted on

By Jeff Bullock

Money & Investing – September 2021

A Nickel Ain’t Worth A Dime Anymore

Yogi Berra was one of the all-time greats at baseball. A WWII veteran, he was an 18x All-Star and won ten World Series playing for the New York Yankees – enough said! His No. 8 jersey was retired alongside the other Yankee greats and he was inducted into the Major League Baseball Hall of Fame in 1972.

Outside of his playing career, he became famous for his “Yogi-isms” which were phrases that often seemed to contradict themselves or were redundantly pithy or paradoxical in nature. Whether it was giving general advice or making an appearance on a TV commercial, Yogi was famous for these sayings. One of these phrases that he is credited to have originated is:

“A nickel ain’t worth a dime anymore.” While seemingly paradoxical in nature, there is a lot of truth to the statement, especially in the context of inflation.

Inflation

Inflation eats away at the purchasing power of your money. We see it in two forms: (1) prices of goods go up faster than your income or (2) prices of goods stay flat, but you get less of what you buy (sometimes jokingly called “shrinkflation”). For example, the other week I noticed that the plastic bags we buy now come with 125 bags per box. A few months ago it was 145 bags per box. Same brand, same box size, but I now get fewer bags. However you look at it, plastic bag inflation is up about 15% from a few months ago.

In our zero-interest rate environment, and with inflation seemingly higher than normal for many goods or services, sitting on too much cash can devastate your purchasing power.

Are You Sitting on Too Much Cash?

Are you sitting on too much cash? How much cash is too much cash? While where to invest is a necessary conversation, let’s first figure out if you are sitting on too much cash.

Here is the framework I like to use to help answer this question:

  1. Does your income from all sources cover your annual expenses?
  2. Do you have cash available in an emergency fund in case you lose any of this income for a short period of time?
  3. Do you have cash available for any one-time big purchases earmarked for the coming year?
  4. If you answered Yes to questions 1-3, then any excess above and beyond these savings should probably be invested in some manner to at least try to keep up with inflation.

This is simply a starting point and a framework. Where to invest your excess cash is the next conversation. If you think you are sitting on too much cash, or if you are on Step 4 and have excess to invest, then we should talk. Yogi Berra has never been more accurate, because truly, a nickel ain’t worth a dime anymore. With inflation in full force, a sound strategy around excess cash should be top of mind for everyone. Don’t let inflation devastate your purchasing power.

Feedback from these newsletters is not only welcomed but encouraged. If you have any questions or comments, please email me at jeff@fidelis-wealth.com. If you think this might be useful to any of your friends or family, feel free to forward it to them.

Market Snapshot 08.30.2021

Posted on

Created by: Sam Tenney

  • Federal Reserve chairman Jerome Powell has not laid out any roadmap for tightening the Fed’s balance sheet at the Jackson Hole Symposium, unlike many market participants expected. Other Fed members have hinted tightening talks may come on the September fed minutes.
  • One highlight of both the PMI and durable goods data is that supply backlogs are ongoing, as the ratios of new orders-to-inventories and unfilled durable goods orders-to-shipments both remain above their long-term averages of 1.2x and 6.1x, respectively suggests that an inventory rebuild could act as a tailwind for growth over the coming quarter.
  • China has recently unveiled legislation to limit minors access to videogames, limiting any Chinese citizen under 18 to three hours a week of videogames on Friday nights. This has had a huge impact on international gaming stocks, with Chinese gaming giant Tencent having lost nearly half its market cap since the introduction of the legislation.

SOURCES

https://www.ft.com/content/ced45222-f266-4d48-b754-e960e8581c94

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/

https://www.wsj.com/articles/china-sets-new-rules-for-youth-no-more-videogames-during-the-school-week-11630325781?mod=rsswn

Please note by using any of the links provided for your convenience, you will be leaving Fidelis Wealth Advisors website. The hyperlinks are to websites and servers maintained by third parties. We do not control, evaluate, endorse, or guarantee content found in those sites. Your use of such sites is at your own risk.

This blog is general communication being provided for informational purposes only.  This information is in no way a solicitation or offer to sell securities or investment advisory services.  It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy.  This does not contain sufficient information to support an investment decision.  Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest.   Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved.  No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Fidelis Wealth Advisors, LLC. Fidelis Wealth Advisors does not provide legal or tax advice.  Please be advised to consult with your investment advisor, attorney or tax professional before making any investment decisions.

Market Snapshot 08.23.2021

Posted on

Created by: Sam Tenney

  • US Composite PMI has dropped to 55.4, a large drop from the market consensus 59.2 expected reading. Along with other recent misses in economic data, this shows a slowing of the US economy to normal levels.
  • The Citi Economic Surprise Index has reached negative levels again for the first time since the Covid pandemic. The Economic Surprise index tracks the deviation of economic data from expected data projections, if the index is positive that means data is generally better than expected.
  • Yearly net equity issuances have hit all time highs, reaching $230 billion in net equity issued for the past year, as compared to the tech bubble which had $140 billion in net equity issuances at peak. This is likely due to record IPO and SPAC offerings for 2020, which seems to be reflected in the data.

SOURCES

  1. https://www.reuters.com/business/delta-variant-supply-woes-crimp-business-activity-august-ihs-markit-survey-2021-08-23/
  2. https://www.ft.com/content/f8eaf88b-53f8-4b7f-a110-dcc5ad767c8c
  3. https://www.federalreserve.gov/releases/efa/efa-project-equity-issuance-retirement.htm

Please note by using any of the links provided for your convenience, you will be leaving Fidelis Wealth Advisors website. The hyperlinks are to websites and servers maintained by third parties. We do not control, evaluate, endorse, or guarantee content found in those sites. Your use of such sites is at your own risk.

This blog is general communication being provided for informational purposes only.  This information is in no way a solicitation or offer to sell securities or investment advisory services.  It is educational in nature and not to be taken as advice or a recommendation for any specific investment product or investment strategy.  This does not contain sufficient information to support an investment decision.  Any investment or investment strategy mentioned may not be suitable for all investors or in their best interest.   Statistical information, quotes, charts, references to articles or any other quoted statement or statements regarding market or other financial information is obtained from sources which we believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. All rights are reserved.  No part of this blog including text, graphics, et al, may be reproduced or copied in any format, electronic, print, et al, without written consent from Fidelis Wealth Advisors, LLC. Fidelis Wealth Advisors does not provide legal or tax advice.  Please be advised to consult with your investment advisor, attorney or tax professional before making any investment decisions.

Brandon Waite

PROFESSIONAL

Brandon is new to the wealth management business, however, he brings many skills useful to the profession because of his prior experience. Brandon has worked in the accounting world auditing hedge funds, venture capital firms, and low-income housing organizations. Assessing business risk and financial GAAP accounting has been his primary focus. He is passionate about the world of finance and helping individuals accomplish their financial dreams.

Brandon graduated from Brigham Young University- Idaho with a bachelor’s degree in accounting. Additionally, he holds two professional designations, Certified Public Accountant (CPA) and Certified Fraud Examiner (CFE).

 

PERSONAL

He lives in Castle Rock with his wife Emily, and their three daughters. Most of his free time consists of taking his daughters to the park, enjoying all types of sports, and watching movies.

Jessica Knox

PROFESSIONAL

Jessica joins Fidelis Wealth Advisors as a Leeds School of Business ’24 MBA Candidate focusing on Marketing. Previously, Jessica worked for the St. Louis Blues as the Youth Hockey Coordinator growing the game through various programs in the greater St. Louis area. Jessica also worked at the Indianapolis Motor Speedway organizing ticket distribution for events such as the Indianapolis 500. After graduating from Ball State University with an honors degree in Journalism, Jessica opted to work for a local youth hockey organization in the Indianapolis area. Jessica enjoys providing others with “Aha” moments and empowering them to achieve more than they ever thought possible.

 

PERSONAL

Jessica grew up in Muncie, Indiana and slowly moved west because of her professional career. When not pursuing academic endeavors or working, Jessica is exploring new adventures through a variety of activities ranging from her daily walks as an active dog sitter to discovering and writing stories of all sorts.

Karley Winder

PROFESSIONAL
Karley Winder started at Fidelis Wealth Advisors in 2022. Currently, she is pursuing her bachelor’s degree in financial management at the University of Colorado Denver business school. At Fidelis, she specializes in working with clients on their 401k plans and is dedicated to providing a valuable and quality experience for them. Karley also has several years of entrepreneurial experience from starting her own local businesses in the past. She has sincere interest in finance and is eager to continue gaining experience in the field alongside her education.

PERSONAL

Karley is a Colorado native and has lived in Castle Rock since she was a young girl. She enjoys horseback riding, Pilates, and mountain biking in her free time.

Rilee Erickson

PROFESSIONAL
Rilee comes to Fidelis Wealth Advisors with a background in Financial Services, having previous experience in property and casualty insurance, as well as life insurance. Rilee graduated from the University of Wyoming with a Bachelor of Science in Agribusiness and Horticulture Sciences. Rilee’s passion is helping people protect their family and their future.

 

PERSONAL
Rilee is a Wyoming native and resides in Big Piney, Wyoming with her husband and two boys. Rilee enjoys spending a lot of time outdoors and exploring the beautiful and rugged Wyoming Range.

Skye Fineran

PROFESSIONAL
Skye comes to Fidelis Wealth Advisors as an Administrative Assistant in 2021 and is a recent graduate from West Texas A&M University. There she earned a Bachelor of Business Administration in Management. Skye also completed Amarillo College’s paralegal certification program. Skye enjoys the rewarding feeling of helping clients to achieve their financial goals and looks forward to making a difference at Fidelis Wealth Advisors.

 

PERSONAL
Skye grew up in Tecumseh, Michigan and currently resides in Castle Rock, Colorado with her family. Skye loves art history, playing golf, and spending time with her family and friends.

RIA Innovations

Fidelis Wealth Advisors has a strategic partnership with RIA Innovations, a Division of NWAM, LLC. RIA Innovations provides administrative support services for registered investment advisors nationwide. This service is under the direction of Nelly Mubashi, the Chief Operating Officer.

 

NWAM, LLC, dba Northwest Asset Management & RIA Innovations is an SEC registered investment adviser. NWAM, LLC dba Northwest Asset Management & RIA Innovations and Fidelis Wealth Advisors, LLC are not affiliated companies.

Gabriel Jones

PROFESSIONAL
Gabe started with Fidelis Wealth Advisors as an Investment Research Assistant in 2018, and has an intense passion for investment research.


PERSONAL
Gabe is currently in college to obtain his Bachelors in Finance, and enjoys spending time outside of work hiking and reading.

Dawn Folmer

PROFESSIONAL
Dawn Folmer comes to Fidelis Wealth Advisors with a background in the finance industry, having previous experience with a registered investment advisory firm in Denver. Dawn is a recent graduate of Colorado State University Global, earning a Bachelor of Science degree in Organizational Leadership. As a skilled financial planning assistant, she enjoys the rewarding feeling of helping people reach their financial dreams and retirement goals.

 

PERSONAL
Dawn is a Colorado native and resides in Castle Rock with her family, where they enjoy being adventurous and active in the outdoors. Additionally, she is passionate about travel, food, and playing golf.

Jeff Bullock

PROFESSIONAL
Jeff joined Fidelis Wealth Advisors after spending nearly 10 years working at J.P. Morgan Wealth Management in their Private Bank. As Chief Investment Officer, he is responsible for the overall investment strategy, portfolio construction, and market insights for clients.

 

Jeff held various roles during his decade at J.P. Morgan, including working as an investment specialist on their trading desk, where he was responsible for managing and trading investment portfolios for High Net-Worth families and non-profit foundations throughout the Rocky Mountain region. Jeff helped co-manage over $4.0 billion of investment assets and gained broad experience in portfolio construction and investment strategy, as well as in-depth knowledge in a variety of asset classes and markets. In recent years, Jeff was part of the leadership team that trained new advisors and established an expansion office in Utah.

 

Jeff loves helping people with their money-related questions and management. Very simply, his goal is to help others continuously improve their financial situation, regardless of the current condition. His framework centers around sound advice and proper decision-making by engaging in honest discussion and taking a long-term approach.

 

PERSONAL
Jeff holds a B.S. in Accounting from Brigham Young University. He is a native to Colorado and loves playing golf and being outdoors. He lives in Highlands Ranch with his wife Nicole, and their two children.

Lorie C. Jones, MBA, CFP®

PROFESSIONAL
Lorie began working in financial services in 2013 with a Registered Investment Advisory firm in South Denver. She started as a paraplanner and provided technology and operations support before transitioning to a Client Services Manager role with Empower Retirement. There she managed a book of 300+ Core Market plans before joining Fidelis Wealth Advisors.


Lorie enjoys the challenges presented by financial planning and is rewarded by helping clients thoroughly understand the complexities of finance so they can be better informed and in control of their planning.


In addition to securities licenses, she holds health, life, accident, property, and casualty insurance licenses in the state of Colorado and completed her CERTIFIED FINANCIAL PLANNER™ designation from the CFP® Board of Standards. She is also a member of the Financial Planning Association (FPA).


PERSONAL
Lorie graduated from Colorado State University with an MBA. She enjoys running and has participated in several marathons and half-marathons around the country. She also enjoys hiking with her family, traveling with her husband David and their five children, and working with the cub scout and boy scout programs, including volunteering with the district.